Mortgage News

Rent, Don't Sell Your Home to Afford Downsizing

July 23rd, 2018 5:08 PM by Anne James

Homeowners who might provide a listing for potential Homebuyers won't sell as buying another home, whether bigger or downsizing, means a mortgage with a rate hihger-- one to two percent higher than their current home. In addtion, the new home will be up to thirty or forty percent higher in price than their current home. Historically low rates and rising prices have created a pressure cooker for desperate buyers who are moving to lower-priced counties with a long commute or simply to other states such as Nevada, Texas, or even across country if job offers await at higher pay.
Potentially exisiting home sales rose by 3.3 percent, or a gain of 194,100 sales, per First American Financial Corp. statistics. That market is under-perforning by 4.2 percent or 256,000 in sales, locking out would-be homebuyers and literally locking in potential home sellers. That's a big market out there to sell your home to or a lot of equity locked up in a low-rate on existing homes.
One answer to rate-locked homeowners is to take cash out of their existing home in the form of a Home Equity Line of Credit to downsize or move to a retirement state. With historically high rents, waiting for rates to come down while collecting rent may make sense.
Anne E James is a California-licensed Mortgage Broker with 23 years experience in lending. You can email her at annermsinc@gmail.com

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